Interest Invoices in Fusion Payables

If you enable automatic interest calculation for a supplier and pay an overdue invoice, an invoice for the interest is automatically created and paid.

Caution: You must pay the overdue invoice in a payment process request or through a quick payment.

Setup

To set up automatic interest rate calculation:

·       Enable the Create interest invoices option using the Manage Invoice Options task.

·       Set the Create Interest Invoices option at supplier site using the Manage Suppliers task.

·       Define interest rates using the Manage Interest Rates task.

Note: You can add, change, or delete an interest rate at any time. If a rate isn't defined, the interest calculation uses a zero rate.

Attributes

This table describes some of the attributes of an interest invoice.

Attribute	Description
Number	The interest invoice number is the overdue invoice number plus the suffix -INTx, where x is the number of interest invoices for that overdue invoice. For example, if the invoice number is 54362, the invoice number for the third interest invoice is 54362-INT3.
Payment terms	The payment terms on an interest invoice are immediate. If immediate terms aren't defined, the payment terms for the interest invoice are the same as the payment terms for the overdue invoice.
Amount	The interest calculation is based on the rate on the Manage Interest Rates page and is in accordance with the United States Prompt Payment Act. The calculation formula compounds interest monthly, up to a maximum of 365 days interest.
Currency	The invoice currency for an interest invoice is the same as the invoice currency on the overdue invoice. The payment currency for an interest invoice is the same as the payment currency on the overdue invoice.

Interest Allocation Methods: Critical Choices

The Interest Allocation method on the Manage Invoice Options page determines how invoice distributions for interest invoices are created.

Select one of the following settings:

Single distribution: This setting uses the Interest Expense distribution on the Manage Invoice Options page as the invoice distribution for the interest invoice.

All invoice lines: This setting uses the natural account segment from the Interest Expense distribution to build the distributions for the interest invoice. 


Interest Invoice Setup:

Step 1. Enable “Create Interest Invoice” at invoice options

Navigation: Setup and Maintenance >> Go to Task ‘Manage Invoice Options’

Manage Invoice Options: Interest Setup

 This table lists the options you can set for interest on overdue invoices. 

Option	Description
Create interest invoices	Calculates interest on overdue invoices and creates interest invoices. You can also set this option on the supplier setup. The values for this option on the supplier setup are: Yes, No, Default from Payables Options.
Minimum interest amount	Minimum amount of calculated interest below which an interest invoice is not created.
Interest allocation method	Allocates interest across distributions.
Interest expense distribution	Distribution combination used if allocating interest expense to a single distribution.

Step 2. Set “Create Interest Invoice” at Supplier site level 

Navigation: Procurement -> Suppliers -> Manage Suppliers -> Edit Supplier -> Sites -> Edit Sites -> Invoicing Tab


 


Step 3. Define interest rates

Navigation: Setup and Maintenance -> Manage Interest Rates





Create Interest Invoice in Payables:

Step 1: Create STANDARD invoice like “TEST_INV” with past date like (01-Nov-2018)  and payment terms as immediate then Validate, save and Close it.

Step 2: Make Payment with today’s date, system will automatically calculate interest in highlighted field.

 

Step 3: System automatically creates interest invoice “TEST_INV-INT1”

Step 4: Search Interest invoice from Manage invoice page: